Here’s Why FactSet Research Systems (FDS) Declined in Q3

Baron Funds, an investment management company, released its “Baron Focused Growth Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fund delivered strong results in the third quarter, appreciating 4.83% (Institutional Shares); however, the performance underperformed the Russell 2500 Growth Index’s (the Benchmark) 10.73% gain. The fund’s underperformance stemmed from concerns over a slowdown in economic growth affecting the fund’s more economically sensitive Consumer Discretionary stocks. Furthermore, the rise in competitive pressures has adversely affected the valuations of a few of its holdings. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Baron Focused Growth Fund highlighted stocks such as FactSet Research Systems Inc. (NYSE:FDS). FactSet Research Systems Inc. (NYSE:FDS) is a financial data company that provides integrated financial information and analytical applications for the investment community. The one-month return of FactSet Research Systems Inc. (NYSE:FDS) was -6.00%, and its shares lost 44.70% of their value over the last 52 weeks. On November 4, 2025, FactSet Research Systems Inc. (NYSE:FDS) stock closed at $264.58 per share, with a market capitalization of $9.901 billion.

Baron Focused Growth Fund stated the following regarding FactSet Research Systems Inc. (NYSE:FDS) in its third quarter 2025 investor letter:

FactSet Research Systems Inc. (NYSE:FDS) is a leading provider of investment management tools. Shares fell during the quarter due to a combination of industry-wide concerns about AI, uncertainty surrounding the ongoing CEO transition (which prompted a more conservative preliminary fiscal 2026 outlook), and cautious commentary from several financial data and software peers. The company nevertheless reported solid fiscal fourth-quarter 2025 earnings results, its best quarter ever for new sales, and discussed at length how AI is benefiting the business. We retain long-term conviction in FactSet given its large addressable market, strong execution across both new product development and financial results, and robust free cash flow generation.”

Oversold but Not Overlooked: Why FactSet (FDS) Deserves a Second Look

FactSet Research Systems Inc. (NYSE:FDS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 36 hedge fund portfolios held FactSet Research Systems Inc. (NYSE:FDS) at the end of the second quarter, up from 29 in the previous quarter.  In the fourth quarter of fiscal 2025, FactSet Research Systems Inc. (NYSE:FDS) revenues increased 6.2% year-over-year, reaching $597 million. While we acknowledge the risk and potential of FactSet Research Systems Inc. (NYSE:FDS) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FactSet Research Systems Inc. (NYSE:FDS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered FactSet Research Systems Inc. (NYSE:FDS) and shared the list of best rising dividend stocks to invest in. Conestoga Capital Advisors sold its stake in FactSet Research Systems Inc. (NYSE:FDS) during Q3 2025. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.